China’s Ministry of Commerce last week said it hadn’t banned rare earth exports to Japan amid media reports that China was restricting the shipments. Finance Minister Yoshihiko Noda said there has been no indication from China that there is a formal ban in place.

“There has been concern that some problems have developed at customs for exports and imports and there has also been concern about rare-earth materials. We are looking into that,” Noda said at a press conference in Tokyo today. “We intend to confirm the facts of the situation by using our diplomatic routes.”

Ties between Asia’s two biggest economies soured over the detention of a Chinese fishing boat captain whose ship collided with two Japanese Coast Guard vessels. Japan’s decision to release him last week failed to assuage China, which demanded compensation for the seizure of the trawler and crew.

The ban “could have a very big impact on Japan’s economy,” Kaieda told reporters today in Tokyo. China has been making a “very severe” response to the captain’s arrest, he said. The Ministry of Economy Trade and Industry declined to comment on the issue.

First Step

A Japan-China summit would be the first step toward improving relations between the nations, Kaieda said. Japan’s Prime Minister Naoto Kan plans to attend a summit of Asian and European leaders in Belgium next week, according to Chief Cabinet Secretary Yoshito Sengoku.

Japan is China’s second-biggest trading partner after the U.S., with two-way commerce in the first seven months of the year rising 24.7 percent from the same period in 2009 to $65.2 billion, according to Chinese customs statistics.

China’s government wants companies including Jiangxi Copper Co. and China Minmetals Corp. to consolidate rare earth resources by buying mines or smelting facilities. The nation, which controls more than 90 percent of the global rare earth market, also cut export quotas this year, forcing prices higher.

The rare earth policy has strained trade relations with countries including the U.S. and Japan. The U.S. has asked business groups and unions to provide evidence that China is hoarding rare earths for a case that may be filed at the World Trade Organization, according to industry representatives who asked not to be identified.